Ben Company has the following data for the year just ended: $\begin{array} { l r }
\text { Cash } & \$ 42,000 \
\text { Accounts Receivable } & \$ 28,000 \
\text { Inventory } & \$ 35,000 \
\text { Current Ratio } & 2.4 \text { to } 1 \
\text { Acid-Test Ratio } & 1.6 \text { to } 1
\end{array}$

What were Ben Company's current liabilities?

Question

Ben Company has the following data for the year just ended: $\begin{array} { l r } 
\text { Cash } & \$ 42,000 \
\text { Accounts Receivable } & \$ 28,000 \
\text { Inventory } & \$ 35,000 \
\text { Current Ratio } & 2.4 \text { to } 1 \
\text { Acid-Test Ratio } & 1.6 \text { to } 1
\end{array}$

What were Ben Company's current liabilities?

Quizplus · Accepted Answer

Current Ratio = Current Assets / Current Liabilities

2.4 = (42000 + 28000 + 35000) / Current Liabilities

Current Liabilities = (42000+28000+35000) / 2.4 = $43,750

Acid-Test Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

1.6 = (42000 + 28000) / Current Liabilities

Current Liabilities = (42000 + 28000) / 1.6 = $43,750

Therefore, Ben Company's current liabilities were $43,750.

Ben Company Has the Following Data for the Year Just